The had stocks ended with losses of over 8% on Monday in light of US President Donald Trump imposing a 25% tariff on goods from Canada and Mexico on Saturday, February 1.
These tariffs which were supposed to take effect from 12:01 AM US time on Tuesday, were reversed earlier during the day in the US. Both Mexico and Canada have been given a one-month timeframe before tariffs resume.
Brokerage firm Elara Securities wrote in a note that auto component exports from India to Mexico form 3% of the total exports of $21.2 billion, amounting to $656 million. “Our industry interactions suggest these could be mainly metallurgical components like forgings and casting products,” the brokerage said.
Out of the US sold vehicles, the ones produced in Mexico contribute the highest for companies like General Motors, Toyota and Volkswagen. Nearly 30-40% of vehicles sold by the first two and nearly 60% sold by Volkswagen in the US are produced in Mexico and Canada.
For Samvardhana Motherson, Elara wrote that Mexico contributes to nearly 4% of the company’s overall revenue. “This will have volatility as it needs to be seen how the OEMs shift their production base to avoid the rise in vehicle prices in the US, owing to the tariffs,” the brokerage added.
Mexico contributes to around 2% of Sona BLW’s overall revenue and while bulk of the value addition of the products happens in India, Mexico is used more as an assembly base. “If the end OEM shifts their production to US, this can be transferred to directly cater to US facilities,” the Elara note said.
Elara also said that while the modalities of tariffs on China need to be evaluated further, this could increase the prices of components from China into the US. “There could be a possibility of US companies looking for alternative countries for these products and India could emerge as one of the alternative,” adding that China has one of the largest diecasting components capacities.
As many as 41 lakh shares of Samvardhana Motherson or 0.1% of the company’s outstanding equity also changed hands in a block deal on Monday. Buyers and sellers in the transaction were not known.
Shares of Samvardhana Motherson are trading 7.9% higher on Tuesday at ₹141. The stock was down 40% from its peak on Monday.
Shares of Sona BLW are trading 6.2% higher at ₹515.8. The stock had also declined 38% from its peak as of Monday.
First Published: Feb 3, 2025 6:31 AM IST